Supreme Court Refuses To Entertain Plea Challenging Search Powers Over Digital Devices Under Income Tax Act, 1961, And 2025 Act

A bench comprising Chief Justice Surya Kant and Justice Joymalya Bagchi, however, permitted the petitioner to submit a representation to the Government of India seeking modifications or clarifications regarding the provision. The Court dismissed the writ petition as withdrawn.

Senior Advocate Sanjay Hegde, assisted by Advocate on Record Pranjal Kishore, argued that the provisions of the Act were unconstitutional.

When the matter was first taken up on February 10, the bench had referred to the Supreme Court's 2022 decision in Principal Director of Income Tax (Investigation) v. Laljibhai KanjiBhai Mandalia, which recognised a limited scope of judicial review over searches conducted under Section 132. Hegde had then sought time to examine the judgment in detail, following which the matter was adjourned.

Hegde's main concern related to the statutory framework that exempts tax authorities from disclosing the “reasons to believe” for conducting a search to the assessee or to the Income Tax Appellate Tribunal. He also questioned provisions allowing searches based on the belief that a person “will not” or “would not” produce documents if summoned or that assets “would not be disclosed” for tax purposes. According to the petitioner, these clauses effectively create an “anticipatory search framework” permitting intrusive searches even in the absence of an existing violation of tax law.

The petition further highlighted that Section 247 of the 2025 Act expands search powers into the digital domain, allowing authorities to search “computer systems” and “virtual digital space," including personal devices, cloud servers, and electronic communications.

Addressing these concerns, Justice Bagchi acknowledged the petitioner's apprehensions but declined to hold the provisions unconstitutional, noting that judicial review by constitutional courts remains available.

“We fully understand your concern that it would have been better if S 249 was not there and it was available to superior officers or at any stage in 143 proceedings. Nonetheless, when there is a scope of judicial review, we cannot say that the provision is unconstitutional. We cannot second-guess the wisdom of the Parliament,” Justice Bagchi orally observed.

Hegde argued that meaningful scrutiny should also be available before tribunals, not merely constitutional courts. Justice Bagchi responded that the constitutional inquiry is limited to whether judicial review exists at all and not to the forum where it is exercised. “Here judicial review is vested with a Constitutional Court,” he said.

CJI Surya Kant noted that the law already requires authorities to record the “reasons to believe” in writing and that the dispute primarily concerned the stage at which those reasons may be disclosed.

When Hegde argued that lack of advance disclosure could lead to misuse and post-facto justification of searches, the bench described the concern as speculative.

“This is an initial apprehension. There are provisions which are sometimes innocuously made but which looks like they can be misused.. so Courts may have to examine it later. There are provisions which are capable of misuse but are streamlined over time. These provisions are often for the big tax evaders, etc.," CJI Surya Kant said.

The bench ultimately allowed the petitioner to pursue the issue by submitting a representation to the government and dismissed the plea as withdrawn.